Airlines renew investments in lounge experience

Carriers around the world, including the three largest U.S.
ones, have been developing and opening new airport lounges, including
specialized products for the highest level of premium travelers.

It's a move that is long overdue, said Samuel Engel, senior
vice president of consulting firm ICF's aviation group. Airlines would not deny
now that their lounges needed an upgrade to meet the premium traveler's needs,
he said. "Airlines have been slow to recognize that the lounge is part of
the seamless experience for the customer."

While-premium class seats are major passenger revenue
drivers for airlines, lounges are more of a cost center, tools to attract
premium travelers. Increasingly, airlines are realizing the importance of a
consistent experience from the airport to the plane, he said.

American Airlines, for example, has opened four of its new
Flagship Lounges -- in Miami, Los Angeles, Chicago and New York's John F.
Kennedy International -- and more are on the way in Dallas, Philadelphia and
London.

The lounges include expanded seating, shower suites and such
food and beverage amenities as a specialty cocktail bar and premium wines. Most
of the lounges also provide a sit-down dining area for Flagship first-class
passengers.

Over the past 18 months, Delta has opened flagship clubs in
Atlanta and Seattle and Asanda Spa Lounges in Seattle, JFK and Atlanta. The
carrier also has renovated its clubs in Newark and Minneapolis and expanded its
club at Raleigh-Durham International.

Across many of its lounges, Delta has been expanding food
and beverage options, including bars with craft beers, seasonal cocktails and
sommelier-selected wines at about 20 locations.

United Airlines last year opened lounges in San Francisco
and finished renovation and expansion of two in its Houston hub. The carrier
has delayed the openings of some of its Polaris lounges --only Chicago is open --
but expects to open them in San Francisco, Newark, Houston and Los Angeles this
year. Washington Dulles, London Heathrow, Tokyo Narita and Hong Kong will
follow.

As the Polaris delays indicate, premium lounge rollouts are
complex undertakings and can take years even once they are conceived, Engel
said. In the interim, airline-agnostic lounges, for which passengers can pay to
enter or can gain entry through such avenues as credit card programs rather
than airline class or status, have proliferated.

"United's Polaris is very attractive, and the new
[American Airlines] Admirals Club is a tremendous upgrade, but you've had a
10-year gap that has created an opportunity for some smart entrepreneurs,"
Engel said.

Among those is Airport Lounge Development, which runs 17
lounges with "aggressive plans for expansion," senior vice president
Nancy Knipp said.

They have proven particularly popular to travelers who are
unable to get credentials to get into carrier lounges.

"In the last few years, the ability to get to higher
tiers is becoming more challenging, and the cost of flying in a premium cabin
can be difficult," Knipp said. "Travelers don't have the ability to
get into them."

Most of ALD's lounge traffic comes from global membership
programs like Priority Pass or Lounge Key, and most of the travelers opt for
those programs on their own rather than as part of an organized effort by their
corporate travel programs to get membership, she said.

Both the airlines and private lounge developers are looking
to address crowding issues at peak times. It presents a challenge, as airports
have limited real estate, and airlines often have to spread out into several
smaller lounges, which can get packed, Engel said.

Some of those solutions have been size-based. In December,
United added 60 seats and a secondary buffet area to its Polaris lounge in
Chicago, increasing its space by about 25%, a spokesperson said. When opening
its new terminal in Seoul, Korean Air made sure its combined lounges could seat
600 to handle the massive amounts of passengers that can build up with its A380
traffic. It also built exclusive lounges for top-tier travelers.

Airlines also can make entry more restrictive. Delta, for
example, next year plans to limit Sky Club members' access to travelers with
same-day boarding passes for Delta or one of its partner airlines.

Lounge design can maximize space, such as using banquette
seating or communal tables rather than four-seat tables, Knipp said. In
Atlanta, ALD implemented a hostess program to help visitors find seats during
peak hours, she said.

Whatever the approach, a consistent experience for travelers
ultimately proves more important than the finest amenities, Engel said.

"The hard product is important, but a lounge for a
customer should offer peace of mind," he said. "It should be a safe
space to walk in, put down their bag without worrying about it, get coffee or a
drink without hunting, find Wi-Fi and have the best reservations agents there
to help them with any changes."___